Real Estate Investing Facts

Nowadays with the number of foreclosures that are available, a property in foreclosure could potentially offer a great opportunity in real estate investing. Make sure you check out discounted homes in foreclosure.

Some very disturbing yet opportunistic news according to the National Association of Realtors stated that there will be more than 1 million foreclosures over the next two years and that estimate may turn out to be low. Before you consider buying a property in the foreclosure market, be sure to do your home work. Buying a home in foreclosure can be relatively easy and an excellent investment, but it’s not without risk.

Usually you can find these properties through the state process or various online companies that provide foreclosure lists. Foreclosure proceedings through the state are generally held at the local courthouse, in the clerk’s office or in front of the foreclosed property. When purchasing a foreclosure property from auction, this will probably represent the highest potential return but also the most risk involved.

Another option you might consider is buying a home in pre-foreclosure. You can find a house in pre-foreclosure by studying the public notices about homes in default at your local city hall. This type of information is available from various Internet pre foreclosure companies. Most of these companies will charge a fee, though, for their services. As in most businesses some supply very good information and others not as informative.

Once you locate a property in pre foreclosure, there probably won’t be much competition if any, because the home usually isn’t up for sale yet. Any deal at this time will be a private deal. What you want to do is offer the property owner a price that’s less than market value but more than the amount owed on the bank loan. Quite often home owners in pre foreclosure are quite happy to just pay off their debt and save their credit. What can make this quite difficult for investors is the idea of approaching a home owner who hasn’t put a for-sale sign up yet. Always remember that these home owners are going to lose their property, you are offering them an opportunity to save their credit rating and maybe put some cash in their pockets.

Foreclosures in Canada
Hans

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IRS Says You Must Get Independent Contractor Agreements In Writing.

By Diane Kennedy – 2009

How many times have you heard that a verbal contract is just as good as the paper it’s written on? In other words, a verbal contract is not worth much. Well, the IRS is proving that’s certainly the case when it comes to people you might hire to work in your home or on your property. Surprising? Read on…

I have been helping one of our TaxLoopholes Community members who is having a horrible time with the IRS regarding a worker she had at her house. Yes, at her HOME!

She had some general handyman kind of tasks to get done so she hired a man she found in the local paper.

It was a very normal transaction. He showed up and did some work and she paid him. She liked his work and hired him for more projects. She didn’t take a tax deduction for the work he did. They both parted happy and she promptly forgot about it.

Well, everything was fine until about 2 years later. That’s when she got a letter from the IRS saying that this handyman hadn’t paid his taxes. Not only that, the IRS and the handyman decided she should pay them instead.

Here’s what happened: the handyman was audited. And during the course of the audit, he disclosed that there was no way that he could pay the taxes, especially the 15.3% self-employment tax that was due on his handyman business. So, the IRS agent asked him if he was really sure he wasn’t an employee. If he was an employee, the agent explained, the homeowner would have to pay his taxes.

Of course the handyman thought that was a great idea! He didn’t have the money to pay his taxes and if he could find someone else to pay them, that was a great deal. So he agreed with the IRS agent that he was really an employee. The IRS then told (not asked) the homeowner that she had failed to pay payroll taxes for her newly found employee. Oh, and by the way, since it was 2 years ago, the penalties and interest had caused the initial tax of about $4,000 to double to $8,000!!

She appealed and tried to prove, after the fact, that she hadn’t hired him as an employee and that she’d actually engaged him for some part-time temporary work as an independent contractor.

Here’s the lesson learned: in order to prove that you have an independent contractor you have to pass one of the two tests: the Section 530 test or the 20 Question test. And it looked like she was able to prove that. However, in the end, it came down to just one issue: did she have a written and signed Independent Contractor Agreement? And the answer was “no.” That meant she owed the tax.

This is where a bad story gets worse, though. She also had a couple of rental properties and she had used this same man on those properties, plus she had hired others exactly the same way. Now the IRS wanted to look at all that work as well. In the end, the IRS considered all the people who had worked for her had actually been employees as well.

So, take note! If you have people working for you at your business, on your real estate investments, or even on your home, then you must have a written and signed Independent Contractor Agreement.

Get it done today!

Diane Kennedy, the nation’s preeminent tax strategist, of DK Tax Services, a leading full service tax firm, is owner of TaxLoopholes, an online tax education company, and the author of The Wall Street Journal and Business-Week best-sellers, Loopholes of the Rich and Real Estate Loopholes. Get the latest in What’s Hot in tax strategies, as well as tax-advantaged wealth building resources on her web site: www.Taxloopholes.com.

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Foreclosure Investing

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The City of Buffalo has over 4,000 parcels of improved properties and vacant lots which have ‎been acquired through tax foreclosures. These properties are available in all sections of the City ‎of Buffalo and are classified for residential, business and industrial purposes. ‎Properties owned by the City of Buffalo can be purchased three ways: ‎At Public Auction, City of Buffalo Urban Homestead Program, Purchase (negotiated sale). ‎

The city is required to receive FAIR MARKET VALUE for its real property. The ‎purchase price is established at the time of application using current market data. If the ‎purchase is for an improved parcel (home or other structure), purchaser is required to: ‎provide estimates for necessary repairs, proof of financial ability to complete purchase ‎and repairs, and The City of Buffalo and may assist purchaser with technical and financial ‎support.

Foreclosure Investing

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The Net Operating Income or NOI of any income property is the remaining amount of money left after the operating expenses have been deducted from the actual gross revenue collected. Once you have determined that the actual income collected is being reported correctly, your focus then shifts to the expenses to be deducted.

If you want to increase the net operating income after the annual income is fixed, decrease operational expenses.

The problem that arises with decreasing expenses is that it is easy to cut down on expenses by putting off major repairs needed like a new roof for less expensive, yet temporary roof repairs, or to let other normal maintenance activities fall behind. Look closely at several years’ expenses of any income property to see if there has been a trend of neglected or poor maintenance. Quite often sellers either understate their expenses or fail to account for their own time and sweat, which realistically does not represent a real cost of operations. You then end up with a misrepresented NOI being the result.

Canadian Foreclosures

Kick Start Your U.S. Foreclosure Investing

Hans Anderson

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Once you make the decision to refinance, the next step is to decide which of the many mortgage bankers you are going to choose to work with. You could talk with your friends and family for there input on choosing a lender. People you know who have recently refinanced can be especially useful in helping you to determine which lender to use based on how they were treated. You can get some candid and valuable opinions from people you personally know for help in this aspect.

Comparison shopping is one of the best things that you can do when choosing a lender. You should look for the best interest rate and terms that fit your qualifications and comfort zone. Quotes from each lender that you are looking at should be requested, as this will help you even more with choosing a lender. With quotes you can determine how much money you can save with the lender and a refinancing plan that you are going to get.

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Mortgage Bankers

Hans Anderson

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